[bytefactory]

Opening a Lightning payment channel doesn't require your master private key. You'd create an initial transaction using your primary wallet (which would presumably be in cold storage) to open the Lightning channel and fund it. There's no relation between the two, _at all_. A funding transaction is no different from any other transaction.

By design, the Lightning hot wallet can only hold small amounts of BTC (0.042 BTC currently), and yes, this would be essentially a hot wallet. The funds are held in a trustless, multi-sig, timelocked payment channel between you and your channel peer (which does not have to be the intended recipient). A channel can stay open indefinitely, and it will be possible to replenish it as needed. The idea is to have it function like a checking account. I fail to see how this is any different from a regular BTC wallet on your phone, or even your bank/investment app (except safer).If you're really paranoid about the funds in your hot wallet, you're free to create an m-of-n multi-sig wallet with somebody else you'd trust, which renders that attack vector useless.

Also, your LN wallet needs to remain online _only_ when it needs to transact. It can go offline the rest of the time with no problem. When it needs to make a LN transaction, it'll need to remain online for the duration of the transaction (a few seconds), or else the fund recovery mechanisms will kick into place.

[ericb]

> doesn't require your master private key

So it does require the private key to your hot-wallet to be on an always on, networked machine, right?

And the hotwallet and lightning channel can only transmit, across all channels, as much as is in this hot-wallet, and each channel has a potentially higher and rising transaction cost to open as lightning network will generate more transactions to the blockchain, not less. So you can keep your cake safe, or eat it, but not both.

I'll take the bitcoin cash approach, please. Worse is better.

[bytefactory]

> So it does require the private key to your hot-wallet to be on an always on, networked machine, right?

No. You can have the private key in an offline hardware wallet like Ledger, with the lightning app on your machine waiting for the device to sign it.

> And the hotwallet and lightning channel can only transmit, across all channels, as much as is in this hot-wallet, and each channel has a potentially higher and rising transaction cost to open as lightning network will generate more transactions to the blockchain, not less. So you can keep your cake safe, or eat it, but not both.

Let's break this down:

>lightning channel can only transmit, across all channels, as much as is in this hot-wallet

No. Each channel has its own limits, and there's no limits to the number of channels you can open.

> each channel has a potentially higher and rising transaction cost to open as lightning network will generate more transactions to the blockchain, not less If you want to open a lot of channels, yes, each one will incur a blockchain transaction. Keep in mind though that you don't need a channel per payment/per payment provider. Payments are _routed_ to your recipient via the network, in up to 20 hops, so you don't need to have a channel open to your recipient directly.

Also, in theory this should lead to _lower_ transaction fees on the network, not higher. Lightning transactions need to be segwit by design, so there's a 75% discount to each transaction. Since each channel can have an unlimited number of transactions on it, this should lead to a massive number of transactions moving out of the main blockchain into LN channels. Additionally, the channels can be opened whenever you want, so you don't have to wait till you're paying for your coffee to open the channel. If you don't mind waiting for a few blocks, you can open the channel for cents.

We don't know how this plays out in practice, of course, so we'll have to wait and see.

Edit: formatting

[freejulian]

Not necessarily. Easy to build a lightning wallet that uses a hardware wallet for signing.